13. Stockholders' Equity

Preferred Stock

On June 30, 2015 we redeemed our 3.0 million shares of series A preferred stock for $300.0 million and our 10.0 million shares of series B preferred stock for $250.0 million. At redemption, we recognized $8.2 million excess redemption value over carrying value of the preferred shares redeemed as an adjustment to determine net income available to common stockholders.

On March 30, 2015 and June 30, 2015, we paid a dividend of $8.2 million and $8.3 million, respectively, equal to $1.39 per share on Series A non-cumulative perpetual preferred stock and equal to $0.41 per share on Series B non-cumulative perpetual preferred stock. Dividends were paid to stockholders of record as of March 12, 2015 and June 11, 2015, respectively.

Reconciliation of Outstanding Shares

	Series A preferred stock			Series B preferred stock			Common stock
	(in millions)
Outstanding shares as of January 1, 2015		3.0			10.0			293.9
Shares issued		—			—			3.5
Treasury stock acquired		—			—			(6.0	)
Preferred stock redemption		(3.0	)		(10.0	)		—

Outstanding shares as of December 31, 2015		—			—			291.4
Shares issued		—			—			3.0
Treasury stock acquired		—			—			(6.7	)

Outstanding shares as of December 31, 2016		—			—			287.7
Shares issued		—			—			4.9
Treasury stock acquired		—			—			(3.6	)

Outstanding shares as of December 31, 2017		—			—			289.0

In February 2014, our Board of Directors authorized a share repurchase program of up to $200.0 million of our outstanding common stock, which was completed in March 2015. In February 2015, our Board of Directors authorized a share repurchase program of up to $150.0 million of our outstanding common stock, which was completed in October 2015. In October 2015, our Board of Directors authorized a share repurchase program of up to $150.0 million of our outstanding common stock, which was completed in March 2016. In February 2016, our Board of Directors authorized a share repurchase program of up to $400.0 million of our outstanding common stock. In May 2017, our Board of Directors authorized a share repurchase program of up to $250.0 million of our outstanding common stock. Shares repurchased under these programs are accounted for as treasury stock, carried at cost and reflected as a reduction to stockholders' equity.

Other Comprehensive Income (Loss)

	For the year ended December 31, 2017
	Pre-Tax			Tax			After-Tax
	(in millions)
Net unrealized gains on available-for-sale securities during the period	$	1,074.2		$	(341.6	)	$	732.6
Reclassification adjustment for losses included in net income (1)		67.8			(23.5	)		44.3
Adjustments for assumed changes in amortization patterns		(26.2	)		9.3			(16.9	)
Adjustments for assumed changes in policyholder liabilities		(184.6	)		64.1			(120.5	)

Net unrealized gains on available-for-sale securities		931.2			(291.7	)		639.5

Noncredit component of impairment losses on fixed maturities, available-for-sale during the period		53.1			(17.0	)		36.1

Adjustments for assumed changes in amortization patterns		(6.4	)		2.3			(4.1	)
Adjustments for assumed changes in policyholder liabilities		(1.3	)		0.5			(0.8	)

Noncredit component of impairment losses on fixed maturities, available-for-sale (2)		45.4			(14.2	)		31.2

Net unrealized losses on derivative instruments during the period		(46.7	)		16.0			(30.7	)
Reclassification adjustment for gains included in net income (3)		(31.6	)		10.8			(20.8	)
Adjustments for assumed changes in amortization patterns		3.9			(1.3	)		2.6
Adjustments for assumed changes in policyholder liabilities		9.6			(3.3	)		6.3

Net unrealized losses on derivative instruments		(64.8	)		22.2			(42.6	)

Foreign currency translation adjustment during the period		171.6			4.7			176.3
Reclassification adjustment for losses included in net income (4)		2.6			—			2.6

Foreign currency translation adjustment		174.2			4.7			178.9

Unrecognized postretirement benefit obligation during the period		24.0			(3.8	)		20.2
Amortization of amounts included in net periodic benefit cost (5)		31.1			(14.0	)		17.1

Net unrecognized postretirement benefit obligation		55.1			(17.8	)		37.3

Other comprehensive income	$	1,141.1		$	(296.8	)	$	844.3

	For the year ended December 31, 2016
	Pre-Tax			Tax			After-Tax
	(in millions)
Net unrealized gains on available-for-sale securities during the period	$	254.6		$	(78.1	)	$	176.5
Reclassification adjustment for losses included in net income (1)		67.9			(23.5	)		44.4
Adjustments for assumed changes in amortization patterns		5.6			(2.0	)		3.6
Adjustments for assumed changes in policyholder liabilities		(177.2	)		51.8			(125.4	)

Net unrealized gains on available-for-sale securities		150.9			(51.8	)		99.1

Noncredit component of impairment losses on fixed maturities, available-for-sale during the period		(0.3	)		(1.5	)		(1.8	)
Adjustments for assumed changes in amortization patterns		(3.4	)		1.2			(2.2	)
Adjustments for assumed changes in policyholder liabilities		0.8			(0.3	)		0.5

Noncredit component of impairment losses on fixed maturities, available-for-sale (2)		(2.9	)		(0.6	)		(3.5	)

Net unrealized gains on derivative instruments during the period		32.6			(7.6	)		25.0
Reclassification adjustment for gains included in net income (3)		(27.7	)		5.4			(22.3	)
Adjustments for assumed changes in amortization patterns		2.9			(1.0	)		1.9
Adjustments for assumed changes in policyholder liabilities		16.9			(6.0	)		10.9

Net unrealized gains on derivative instruments		24.7			(9.2	)		15.5

Foreign currency translation adjustment		75.6			(7.5	)		68.1

Unrecognized postretirement benefit obligation during the period		20.2			(6.8	)		13.4
Amortization of amounts included in net periodic benefit cost (5)		49.1			(20.7	)		28.4

Net unrecognized postretirement benefit obligation		69.3			(27.5	)		41.8

Other comprehensive income	$	317.6		$	(96.6	)	$	221.0

	For the year ended December 31, 2015
	Pre-Tax			Tax			After-Tax
	(in millions)
Net unrealized losses on available-for-sale securities during the period	$	(1,713.7	)	$	589.0		$	(1,124.7	)
Reclassification adjustment for losses included in net income (1)		15.1			(5.4	)		9.7
Adjustments for assumed changes in amortization patterns		201.2			(70.4	)		130.8
Adjustments for assumed changes in policyholder liabilities		779.0			(265.5	)		513.5

Net unrealized losses on available-for-sale securities		(718.4	)		247.7			(470.7	)

Noncredit component of impairment losses on fixed maturities, available-for-sale during the period		29.4			(10.2	)		19.2
Adjustments for assumed changes in amortization patterns		(0.9	)		0.3			(0.6	)
Adjustments for assumed changes in policyholder liabilities		0.7			(0.2	)		0.5

Noncredit component of impairment losses on fixed maturities, available-for-sale (2)		29.2			(10.1	)		19.1

Net unrealized gains on derivative instruments during the period		58.4			(20.4	)		38.0
Reclassification adjustment for gains included in net income (3)		(36.9	)		12.5			(24.4	)
Adjustments for assumed changes in amortization patterns		19.5			(6.9	)		12.6
Adjustments for assumed changes in policyholder liabilities		(10.8	)		3.8			(7.0	)

Net unrealized gains on derivative instruments		30.2			(11.0	)		19.2

Foreign currency translation adjustment		(543.6	)		72.0			(471.6	)

Unrecognized postretirement benefit obligation during the period		(142.5	)		55.5			(87.0	)
Amortization of amounts included in net periodic benefit cost (5)		81.2			(33.3	)		47.9

Net unrecognized postretirement benefit obligation		(61.3	)		22.2			(39.1	)

Other comprehensive loss	$	(1,263.9	)	$	320.8		$	(943.1	)

(1)	Pre-tax reclassification adjustments relating to available-for-sale securities are reported in net realized capital gains (losses) on the consolidated statements of operations.
(2)	Represents the net impact of (1) unrealized gains resulting from reclassification of previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have now been sold or are intended to be sold and (2) unrealized losses resulting from reclassification of noncredit impairment losses for fixed maturities with bifurcated OTTI from net realized capital gains (losses) to OCI.
(3)	See Note 5, Derivative Financial Instruments — Cash Flow Hedges, for further details.
(4)	Pre-tax reclassification adjustments relating to deconsolidated sponsored investment funds are reported in net realized capital gains (losses) on the consolidated statements of operations. $2.0 million of this reclassification relates to noncontrolling interest and is reported in net income attributable to noncontrolling interest on the consolidated statements of operations.
(5)	Amount is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, which is reported in operating expenses on the consolidated statements of operations. See Note 11, Employee and Agent Benefits — Components of Net Periodic Benefit Cost, for further details.

Accumulated Other Comprehensive Income (Loss)

	Net unrealized gains on available-for-sale securities			Noncredit component of impairment losses on fixed maturities available-for-sale			Net unrealized gains on derivative instruments			Foreign currency translation adjustment			Unrecognized postretirement benefit obligation			Accumulated other comprehensive income (loss)
	(in millions)
Balances as of January 1, 2015	$	1,202.8		$	(105.1	)	$	50.6		$	(686.8	)	$	(411.1	)	$	50.4
Other comprehensive loss during the period, net of adjustments		(480.4	)		—			43.6			(451.1	)		(87.0	)		(974.9	)
Amounts reclassified from AOCI		9.7			19.1			(24.4	)		—			47.9			52.3

Other comprehensive loss		(470.7	)		19.1			19.2			(451.1	)		(39.1	)		(922.6	)
Purchase of subsidiary shares from noncontrolling interest		—			—			—			(10.3	)		—			(10.3	)

Balances as of December 31, 2015		732.1			(86.0	)		69.8			(1,148.2	)		(450.2	)		(882.5	)
Other comprehensive income during the period, net of adjustments		54.7			(3.5	)		37.8			63.7			13.4			166.1
Amounts reclassified from AOCI		44.4			—			(22.3	)		—			28.4			50.5

Other comprehensive income		99.1			(3.5	)		15.5			63.7			41.8			216.6
Purchase of subsidiary shares from noncontrolling interest		—			—			—			(9.3	)		—			(9.3	)

Balances as of December 31, 2016		831.2			(89.5	)		85.3			(1,093.8	)		(408.4	)		(675.2	)
Other comprehensive income during the period, net of adjustments		595.2			—			(21.8	)		174.7			20.2			768.3
Amounts reclassified from AOCI		44.3			31.2			(20.8	)		0.6			17.1			72.4

Other comprehensive income		639.5			31.2			(42.6	)		175.3			37.3			840.7

Balances as of December 31, 2017	$	1,470.7		$	(58.3	)	$	42.7		$	(918.5	)	$	(371.1	)	$	165.5

Noncontrolling Interest

Interests held by unaffiliated parties in consolidated entities are reflected in noncontrolling interest, which represents the noncontrolling partners' share of the underlying net assets of our consolidated subsidiaries. Noncontrolling interest that is not redeemable is reported in the equity section of the consolidated statements of financial position.

The noncontrolling interest holders in certain of our consolidated entities maintain an equity interest that is redeemable at the option of the holder, which may be exercised on varying dates. Since redemption of the noncontrolling interest is outside of our control, this interest is presented on the consolidated statements of financial position line item titled "Redeemable noncontrolling interest." Our redeemable noncontrolling interest primarily relates to consolidated sponsored investment funds for which interests are redeemed at fair value from the net assets of the funds.

For our redeemable noncontrolling interest related to other consolidated subsidiaries, redemptions are required to be purchased at fair value or a value based on a formula that management intended to reasonably approximate fair value based on a fixed multiple of earnings over a measurement period. The carrying value of the redeemable noncontrolling interest is compared to the redemption value at each reporting period. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in redemption value prior to exercise of the redemption option are determined after the attribution of net income or loss of the subsidiary and are recognized in the redemption value as they occur. Adjustments to the carrying value of redeemable noncontrolling interest result in adjustments to additional paid-in capital and/or retained earnings. Adjustments are recorded in retained earnings to the extent the redemption value of the redeemable noncontrolling interest exceeds its fair value and will impact the numerator in our earnings per share calculations. All other adjustments to the redeemable noncontrolling interest are recorded in additional paid-in capital.

Following is a reconciliation of the changes in the redeemable noncontrolling interest (in millions):

Balance as of January 1, 2015	$	58.0
Net income attributable to redeemable noncontrolling interest		4.9
Contributions from redeemable noncontrolling interest		56.1
Distributions to redeemable noncontrolling interest		(15.1	)
Purchase of subsidiary shares from redeemable noncontrolling interest		(6.0	)
Change in redemption value of redeemable noncontrolling interest		6.6
Other comprehensive income attributable to redeemable noncontrolling interest		(18.8	)

Balance as of December 31, 2015		85.7
Net income attributable to redeemable noncontrolling interest		16.8
Redeemable noncontrolling interest of newly consolidated entities (1)		179.5
Redeemable noncontrolling interest of deconsolidated entities (2)		(261.5	)
Contributions from redeemable noncontrolling interest		135.1
Distributions to redeemable noncontrolling interest		(57.4	)
Purchase of subsidiary shares from redeemable noncontrolling interest		(8.2	)
Change in redemption value of redeemable noncontrolling interest		4.2
Other comprehensive income attributable to redeemable noncontrolling interest		3.3

Balance as of December 31, 2016		97.5
Net income attributable to redeemable noncontrolling interest		7.0
Redeemable noncontrolling interest of deconsolidated entities (2)		(61.1	)
Contributions from redeemable noncontrolling interest		94.1
Distributions to redeemable noncontrolling interest		(39.0	)
Purchase of subsidiary shares from redeemable noncontrolling interest		(4.4	)
Change in redemption value of redeemable noncontrolling interest		5.9
Other comprehensive income attributable to redeemable noncontrolling interest		1.3

Balance as of December 31, 2017	$	101.3

(1)	Effective January 1, 2016, certain sponsored investment funds were consolidated as a result of the implementation of new accounting guidance.
(2)	We deconsolidated certain sponsored investment funds as they no longer met the requirements for consolidation.

Dividend Limitations

The declaration and payment of our common stock dividends is subject to the discretion of our Board of Directors and will depend on our overall financial condition, results of operations, capital levels, cash requirements, future prospects, receipt of dividends from Principal Life (as described below), risk management considerations and other factors deemed relevant by the Board. No significant restrictions limit the payment of dividends by us, except those generally applicable to corporations incorporated in Delaware.

Under Iowa law, Principal Life may pay stockholder dividends only from the earned surplus arising from its business and must receive the prior approval of the Commissioner of Insurance of the State of Iowa (the "Commissioner") to pay a stockholder dividend if such a stockholder dividend would exceed certain statutory limitations. In general, the current statutory limitation is the greater of 10% of Principal Life's policyholder surplus as of the preceding year-end or the net gain from operations from the previous calendar year. Based on this limitation and 2017 statutory results, Principal Life could pay approximately $1,122.4 million in ordinary stockholder dividends in 2018 without prior regulatory approval. However, because the dividend test is based on dividends previously paid over rolling 12-month periods, if paid before a specified date during 2018, some or all of such dividends may be extraordinary and require regulatory approval.

On May 1, 2017, Principal Life sold its ownership interest in Principal Global Investors, LLC to Principal Life's direct parent, Principal Financial Services, Inc. in connection with a corporate reorganization designed to better utilize and allocate capital internally. Subsequent to the sale, Principal Life paid an extraordinary dividend of $1,068.4 million to its parent, which was approved by the Commissioner, primarily from proceeds received from the sale.